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FATF Report on Extreme Right Financing Highlights Cryptocurrency Use
“Some [extreme right-wing] groups have used so called ‘privacy coins,’” the FATF report states.
By Ian Allison
Updated Sep 14, 2021, 1:19 p.m. Published Jun 30, 2021, 2:30 p.m.
The Financial Action Task Force (FATF), a global anti-money laundering watchdog, has released a report on the ways extreme right-wing groups are financed, which includes a section on cryptocurrency.
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The FATF’s report, titled “Ethnically or Racially Motivated Terrorism Financing,” points out that virtual assets like bitcoin have been used by extremists who have been gradually shut out of traditional payment platforms, in the same way extreme right-wing (ERW) groups have been blocked from social media.
The report highlights that some ERW groups have switched to “so-called ‘privacy coins,’ i.e., VAs [virtual assets] that allow a user to maintain total anonymity when making blockchain transactions.”
It’s worth noting that the blockchains underpinning virtual assets, even end-to-end encrypted varieties, leave some record of transactions – as opposed to cash, the preferred medium of exchange for criminals and terrorists.
It's also worth noting that other unconventional funding vehicles merit scrutiny:
Extreme right wing groups also use concerts, music festivals, mixed martial arts events, and merchandise sales to raise funds, socialise and network. Differences in legal systems can make it challenging to target producers of extremist material. 7/9
— FATF (@FATFNews) June 30, 2021
“There has been plenty of interest in VAs from different ERW groups and individuals looking for anonymity, especially after being removed from mainstream payment platforms,” the report states, adding:
“ERW actors that feel more security-conscious and desire a greater level of secrecy, often choose VAs. However, notably there is limited information on the volume of funds being transferred in this way.
The FATF report goes on to list examples, such as one far-right organization in South Africa that created its own stablecoin that operates on a 1:1 ratio with the South African rand (ZAR).
“The stablecoin, managed by an application styled PayApp, enables the group to use digital money as cash,” said the FATF report. “The transactional data lasts 24 hours and thereafter is untraceable.”
FATF said bank statement analysis on the South African extremist group showed that the organization raised ZAR 268,000 ($17,469) in funds.
Other examples included Scandinavian ERW group Nordisk Styrke, which only gives cryptocurrency addresses on the organization’s donations page.
A financial investigation into the terror attack perpetrated by the Christchurch mosque shooter in New Zealand in March 2019 found that he had made use of virtual assets to transfer funds, the FATF report said.
Read the full report:
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